ST. LOUIS & NEW YORK--(BUSINESS WIRE)--Stifel Financial Corp. (NYSE: SF) and KBW, Inc. (NYSE: KBW) today
announced that they have entered into a definitive merger agreement to
create the premier middle-market investment bank with a specialized
focus on the financial services industry.

Under the terms of the agreement, which was unanimously approved by the
boards of directors of both companies, KBW shareholders will receive
$17.50 per share, comprised of $10.00 per share in cash and $7.50 per
share in Stifel common stock. Additionally, holders of certain
restricted KBW shares, that will continue to vest post closing, will
receive $17.50 in Stifel common stock. The stock component of the
consideration is fixed at $7.50 per share, subject to a collar, provided
that the volume weighted average closing price of Stifel common stock
for the ten days prior to closing is between $29.00 and $35.00 per
share. If the volume weighted average price rises above $35.00 per
share, the exchange ratio will be fixed at 0.2143 shares of Stifel
common stock for each share of KBW, and if it falls below $29.00 per
share, the exchange ratio will be fixed at 0.2586 shares of Stifel
common stock for each share of KBW.

The transaction is valued in excess of $575 million, which includes the
outstanding shares and restricted stock awards of KBW. Approximately
$250 million in excess capital on KBW’s balance sheet is expected to be
immediately available to Stifel upon closing.

Ronald J. Kruszewski, Chairman, President and CEO of Stifel Financial
Corp. said, “This transaction is expected to be accretive to shareholder
value. This merger with KBW, a premier, specialized financial services
firm, provides Stifel with an exciting opportunity to grow and become a
market leader in the financial services sector. Our shared culture and
platforms are highly complementary, and this combination expands our
capabilities at a time when we believe the financial services sector is
poised to benefit from improving fundamentals. I am confident our
clients will benefit from our expanded services and expertise.”

Thomas B. Michaud, President and CEO of KBW, said, “This merger will
allow KBW to focus on its strengths in the financial services sector
while offering clients a greatly expanded array of products and services
through the Stifel platform. KBW’s deep roster of client relationships
will be supported by a strong institutional business and global wealth
management business. With little overlap, this merger will provide a
significant opportunity to grow our combined companies' market share.”

The combined company will provide investment banking, sales and trading,
and research in the financial services vertical through KBW’s Keefe,
Bruyette & Woods broker-dealer subsidiary, which will continue to
operate as an independent subsidiary of Stifel following completion of
the transaction. Stifel will utilize KBW’s preeminent market brand as a
highly focused, specialized financial services platform of choice.

Stifel has identified significant synergies that will leverage the
integrated platforms and take advantage of Stifel’s robust global wealth
management capabilities. Annualized net revenues for the two companies
are approximately $1.8 billion, based upon 2012 results through
September 30, 2012.

The merger is subject to approval by KBW shareholders and customary
regulatory approvals. Thomas Michaud will join Stifel’s board and
management team upon completion of the merger and will remain Chief
Executive Officer of the KBW business unit.

Stifel was advised by its own wholly owned subsidiary, Stifel, Nicolaus
& Company, Incorporated and was represented by Bryan Cave LLP. Stephens
Inc. rendered a fairness opinion to the board of directors of Stifel
Financial Corp. KBW was advised by its own wholly owned subsidiary,
Keefe, Bruyette & Woods, Inc., and BofA Merrill Lynch, and was
represented by Sullivan & Cromwell LLP.

Conference Call Information/ Earnings Announcement

Stifel and KBW will host a joint conference call today, November 5, at
8:30 a.m. (Eastern).

All interested parties are invited to listen to Stifel’s Chairman,
President and CEO, Ronald J. Kruszewski, and KBW’s CEO and President,
Thomas B. Michaud, by dialing (800) 651-2240 and referencing conference
ID #64728788.

Also today, November 5, Stifel will issue its financial results for the
third quarter ended Sept. 30, before the market opens. Stifel will
review the results during the same conference call today, at 8:30 a.m.
(Eastern).

A live audio webcast of the call, as well as a presentation highlighting
the Company’s results, will be available through the Company's website, www.stifel.com.
For those who cannot listen to the live broadcast, a replay of the
broadcast will be available through the above-referenced website
beginning approximately one hour following the completion of the call.

Company Information

Stifel Financial Corp. (NYSE: SF) is a financial services holding
company headquartered in St. Louis, which conducts its banking,
securities, and financial services business through several wholly owned
subsidiaries. Stifel clients are served through Stifel, Nicolaus &
Company, Incorporated in the U.S., through Stifel Nicolaus Canada Inc.
in Canada, and through Stifel Nicolaus Europe Limited in the United
Kingdom and Europe. The Company’s broker-dealer affiliates provide
securities brokerage, investment banking, trading, investment advisory,
and related financial services to individual investors, professional
money managers, businesses, and municipalities. Stifel Bank & Trust
offers a full range of consumer and commercial lending solutions. Stifel
Trust Company, N.A. offers trust and related services. To learn more
about Stifel Financial, please visit the Company’s website at www.stifel.com.

KBW, Inc., headquartered in New York, operates in the U.S., Europe and
Asia through its broker dealer subsidiaries, Keefe, Bruyette & Woods,
Inc., Keefe, Bruyette & Woods Limited and Keefe, Bruyette & Woods Asia
Limited. Celebrating its 50th anniversary, KBW has established itself as
a leading independent authority in the banking, insurance, brokerage,
asset management, mortgage banking, real estate and specialty finance
sectors. Founded in 1962, the firm maintains industry-leading positions
in the areas of research, corporate finance, mergers and acquisitions as
well as sales and trading in equities and debt securities of financial
services companies.

Cautionary Note Regarding Forward-Looking Statements

Statements in this presentation that relate to the future plans, events,
expectations, performance, objectives and the like of Stifel Financial
Corp., as well as Stifel, Nicolaus and Company, Inc. and its other
subsidiaries (collectively, “Stifel” or the “Company”) and KBW, Inc.
(“KBW”), may constitute “forward-looking statements” within the meaning
of the Private Securities Litigation Reform Act of 1995, Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Future events, risks and
uncertainties, individually or in the aggregate, could cause our actual
results to differ materially from those expressed or implied in these
forward-looking statements.

The material factors and assumptions that could cause actual results to
differ materially from current expectations include, without limitation,
the following: (1) the inability to close the merger in a timely manner;
(2) the inability to complete the merger due to the failure to obtain
stockholder approval and adoption of the merger agreement and approval
of the merger or the failure to satisfy other conditions to completion
of the merger, including required regulatory and other approvals; (3)
the failure of the transaction to close for any other reason; (4) the
possibility that the integration of KBW’s business and operations with
those of Stifel may be more difficult and/or take longer than
anticipated, may be more costly than anticipated and may have
unanticipated adverse results relating to KBW’s or Stifel’s existing
businesses; (5) the challenges of integrating and retaining key
employees; (6) the effect of the announcement of the transaction on
Stifel’s, KBW’s or the combined company’s respective business
relationships, operating results and business generally; (7) the
possibility that the anticipated synergies and cost savings of the
merger will not be realized, or will not be realized within the expected
time period; (8) the possibility that the merger may be more expensive
to complete than anticipated, including as a result of unexpected
factors or events; (9) the challenges of maintaining and increasing
revenues on a combined company basis following the close of the merger;
(10) diversion of management’s attention from ongoing business
operations and opportunities; (11) general competitive, economic,
political and market conditions and fluctuations; (12) actions taken or
conditions imposed by the United States and foreign governments; (13)
adverse outcomes of pending or threatened litigation or government
investigations; (14) the impact of competition in the industries and in
the specific markets in which Stifel and KBW, respectively, operate; and
(15) other factors that may affect future results of the combined
company described in the section entitled “Risk Factors” in the proxy
statement/prospectus to be mailed to KBW’s shareholders and in Stifel’s
and KBW’s respective filings with the U.S. Securities and Exchange
Commission (“SEC”) that are available on the SEC’s web site located at www.sec.gov,
including the sections entitled “Risk Factors” in Stifel’s Form 10-K for
the fiscal year ended December 31, 2011, and “Risk Factors” in KBW’s
Form 10-K for the fiscal year ended December 31, 2011. Readers are
strongly urged to read the full cautionary statements contained in those
materials. We assume no obligation to update any forward-looking
statements to reflect events that occur or circumstances that exist
after the date on which they were made.

Additional Information

In connection with the proposed merger, Stifel will be filing a
registration statement on Form S-4 that will include a proxy statement
of KBW that also constitutes a prospectus of Stifel and other relevant
documents relating to the merger with the Securities and Exchange
Commission (the “SEC”). Stifel and KBW shareholders are urged to read
the registration statement and any other relevant documents filed with
the SEC, including the proxy statement/prospectus that will be part of
the registration statement, because they will contain important
information about Stifel, KBW and the proposed transaction. The final
proxy statement/prospectus will be mailed to shareholders of KBW.
Investors and security holders will be able to obtain free copies of the
registration statement and proxy statement/prospectus (when available)
as well as other filed documents containing information about Stifel and
KBW, without charge, at the SEC’s website (www.sec.gov).
Free copies of Stifel’s SEC filings are also available on Stifel’s
website (www.stifel.com),
and free copies of KBW’s SEC filings are available on KBW’s website (www.kbw.com).
Free copies of Stifel’s filings also may be obtained by directing a
request to Stifel’s Investor Relations by phone to (314) 342-2000 or in
writing to Stifel Financial Corp., Attention: Investor Relations, 501
North Broadway, St. Louis, Missouri 63102. Free copies of KBW’s filings
also may be obtained by directing a request to KBW’S Investor Relations
by phone to 415-364-2500, in writing to KBW, Inc., Attn: Alan Oshiki,
c/o King Worldwide Investor Relations, 48 Wall Street, 32nd Floor, New
York, New York 10005, or by email to kbw.inv.relations@kbw.com.

This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, nor shall there be any sale
of securities in any jurisdiction in which such solicitation or sale
would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction.

Proxy Solicitation

Stifel, KBW and their respective directors and executive officers may be
deemed, under SEC rules, to be participants in the solicitation of
proxies from the shareholders of KBW with respect to the proposed
transaction. More detailed information regarding the identity of the
potential participants, and their direct or indirect interests, by
securities holdings or otherwise, will be set forth in the registration
statement and proxy statement/prospectus and other materials to be filed
with the SEC in connection with the proposed transaction. Information
regarding Stifel’s directors and executive officers is also available in
Stifel’s definitive proxy statement for its 2012 Annual Meeting of
Shareholders filed with the SEC on April 20, 2012. Information regarding
KBW’s directors and executive officers is also available in KBW’s
definitive proxy statement for its 2012 Annual Meeting of Shareholders
filed with the SEC on April 27, 2012. These documents are available free
of charge at the SEC’s web site at www.sec.gov
and from Investor Relations at KBW and Stifel Financial.